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196 terms

Business Law Final

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Agency Law
large body of common law that governs agency; a mixture of contract law and tort law
Agency
fiduciary relationship "which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act;" the principal-agent relationship
Principal
party who employs another person to act on his or her behalf
Agent
party who agrees to act on behalf of another. Example: Ask someone to turn in your homework, you have now given that person authority and he/she is now the agent
Principal-Agent Relationship
formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf
Employer-Employee Relationship
results when an employer hires an employee to perform some task or service but the employee has not been authorized to enter into contracts on behalf of his employer
Express Agency
occurs when a principal and an agent expressly agree to enter into an agency agreement with each other; most common form of agency. Example: Power of Attorney
Exclusive Agency Contract
is where a principal and agent enter into a contract that says the principal cannot employ any agent other than the exclusive agent
Implied Agency
occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties; the agents authority is determines from the facts and circumstances of the situation
Incidental Authority
occurs when the agent has emergency powers to take all reasonable actions to protect the principal's property and rights
Agency by Ratification
occurs when a person misrepresents him/her-self as another's agent when in fact he or she is not and the purported principal ratifies the unauthorized act
Apparent Agency
arises when a principle creates the appearance of an agency that in actuality does not exist; principal is responsible if a reasonable would think it was acting as an agent (reasonable presumption). Two Requirements: 1. Reasonable person 2. Scope of authority—amount of authority you give to an agent
Duty of Loyalty
the agent not to act unfavorably/negative to the interests of the principal
Intentional Misrepresentation
fraud in which an agent makes an untrue statement that he or she knows is not true
Partially Disclosed Agency
an agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal
Independent Contractor
person who contracts with another to do something for him who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking; person or business that is not an employee but is employed by a principal to perform a certain task on behalf of the principal
Worker's Compensation
paid to workers and their families when workers are injured in connection with their jobs
Occupational Safety and Health Act
federal act that promotes safety in the workplace by imposing record-keeping and reporting of requirements on employers and requires them to post notices in the workplace, informing employees of their rights under the act
Occupational Safety and Health Administration (OSHA)
federal administrative agency within the Department of Labor that is empowered to enforce the act; inspect companies and prevent accidents
Fair Labor Standards Act (FLSA)
federal act to protect workers; prohibits child labor and spells out minimum wage and overtime requirements
Child Labor
1. Children under 14 cannot work (only newspaper delivery) 2. Children 14-15 may work limited hours in nonhazardous jobs 3. Children 16-17 may work unlimited house in nonhazardous jobs. Children who work in agricultural and child actors/performers are exempt from these restrictions
Minimum Wage
requires most employees in the U.S. be paid at least the federal minimum wage for all hours worked; special minimum wage rule for tipped employees
Overtime Pay
an employer cannot require employees to work more than 40 hours per week unless they are paid overtime pay of one-and-a-half times their regular pay for each extra hour worked
Federal Unemployment Tax Act (FUTA)
federal act that requires employers to pay unemployment taxes; unemployment compensation is paid to workers who are temporality unemployed
Social Security
federal system administered by the Social Security Administration that provides limited retirement and death benefits to covered employees and their dependents. Benefits includes: 1. Retirement benefits 2. Survivors' benefits to family members of deceased workers 3. Disability benefits 4. Medicare
Federal Insurance Contributions Act (FICA)
an act in which employees must make pay taxes into the Social Security fund
National Labor Relations Board (NRLB)
federal administrative agency that oversees union elections, prevents employers and unions from engaging in illegal and unfair labor practices, and enforces and interprets certain federal labor laws
Collective Bargaining
act of negotiating contract terms between an employer and the members of a union
Collective Bargaining Agreement
the contract that results from a collective bargaining procedure
Union Shop
workplace where an employee must join the union within a certain number of days after being hired
Agency Shop
workplace where an employee does not have to join the union but must pay a fee equal to union dues
Equal Opportunity in Employment
the right of all employees and job applicants to be treated without discrimination and to be able to sue employers if they are discriminated against
Equal Employment Opportunity Commission
federal administrative agency that is responsible for enforcing most federal antidiscrimination laws
Title VII of the Civil Rights Act of 1964
title of a federal statute enacted to eliminate job discrimination based on five protected classes: race, color, religion, sex, and national origin
Disparate-Treatment Discrimination
occurs when an employer treats a specific individual less favorable than others because of that person's race, color, national origin, sex, or religion
Disparate-Impact Discrimination
occurs when an employer discriminates against an entire protected class. Example: A racially neutral employment practice or rule causes an adverse (unfavorable/bad) impact on a protected class
Same-Sex Discrimination
violates Title VII; many state and local antidiscrimination laws outlaw same-sex discrimination and harassment in the workplace
Bona Fide Occupational Qualification (BFOQ)
a true job qualification; employment discrimination based on a protected class (other than race or color) is lawful if it is job related and a business necessity; may sometimes be able to discriminate based on the job
Equal Pay Act
federal statute that protects both sexes from pay discrimination based on sex; extends to jobs that require equal skill, equal effort, equal responsibility, and similar working conditions
Age Discrimination in Employment Act (ADEA)
a federal statute that prohibits age discrimination practices against employees who are 40 and older
Affirmative Action
a policy that provides that certain job preferences will be given to minority or other protected-class applicants when an employer makes an employment decision
Reverse Discrimination
discrimination against a group that is usually thought of as a majority
Hostile Workplace
discrimination against genders
Quid Pro Quo
means this for that. Example: If you sleep with me you get a raise
Board of Directors
a panel of decision makers who are elected by the shareholders; formulate/set policy decisions that affect the management, supervision, control, and operation of the corporation; authority to appoint the officers of the corporation
Inside Director
a member of the board of directors who is also an officer of the corporation. Example: The president of the corporation often sits as a director of the corporation
Outside Director
a member of the board of directors who is not an officer of the corporation
Officers
employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
Annual Shareholders' Meeting
held by the shareholders of a corporation that must be held by the corporation to elect directors and to vote on other matters
Special Shareholders' Meeting
a meeting called by the shareholders to consider and vote on important or emergency issues, such as a proposed merger or amending the articles of incorporation
Proxy
a written document that a shareholder signs, authorizing another person to vote his or her shares at the shareholders' meetings in the event of the shareholder's absence
Record Date
specified in corporate bylaws that determine whether a shareholder may vote at a shareholders' meeting; date corporation sets prior to receiving dividend payment
Quorum
the required number of directors necessary to hold a board meeting or transact business of the board
Audit Committee
a committee of the board of directors responsible for oversight of the financial reporting process, selection of the independent auditor, and receipt of audit results
Straight Voting
a system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open
Cumulative Voting
a system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates
Annual Report
a report provided to shareholders that contain a balance sheet, an income statement, and a statement of changes in shareholder equity
Dividend
a distribution of profits of the corporation to shareholders—directors are responsible for determining when, where, how, and how much will be paid in dividends
Stock Dividend
the additional shares of stock distributed as a dividend
Piercing the Corporate Veil
a doctrine that says if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations
Fiduciary Duties
the duties of obedience, care, and loyalty owed by directors and officers to their corporation and its shareholders
Duty of Obedience
to act within the authority conferred upon them by state corporation codes, the articles of incorporation, the corporate bylaws, and the resolutions adopted by the board of directors
Duty of Care
to use care and diligence when acting in behalf of the corporation; must fulfill 1. in good faith 2. with the care that an ordinary prudent person in a like position would use under similar circumstance 3. in a manner they reasonably to be in the best interest of the corporation
Business Judgment Rule
directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
Duty of Loyalty
to have not to act adversely (harmfully) to the interests of the corporation and to subordinate (put second/lower) their personal interests to those of the corporation and its shareholders
Usurping a Corporate Opportunity
1. Opportunity presented to director/officer in corporate capacity 2. Opportunity is related to or connected with the corporation's current or proposed business 3. Corporation has the financial ability to take advantage of the opportunity 4. Corporate director/officer took the corporate opportunity for him-or herself
Self-Dealing
occurs when directors/officers take advantage of position in a transaction and act for his/her own person interests rather than for the interests of the corporation
Competing with the Corporation
directors and officers cannot engage in activities unless full disclosure is made and a majority of the disinterested directors or shareholders approve the activity
Secret Profit
when a director or officer breaches his or her duty of loyalty and makes a secret profit on a transaction—the corporation can sue the director or officer to recover the secret profit
Sarbanes-Oxley Act
establishes far-reaching rules regarding corporate governance; goals are to improve corporate governance rules, eliminate conflicts of interests, and instill confidence in investors and the public that management will run public companies in the best interests of all constituents (citizens/components)
Security
an interest or instrument that is common stock, preferred stock, a bond, a debenture, or a warrant aka Common Securities
Securities Act of 1933
federal statute that primarily regulates the issue of securities by companies and other businesses and prohibits fraud during the sale of issued securities; purpose is to require full and honest disclosure of information to investors at the time of the issuance of the securities
Securities Exchange Act of 1934
federal statute to prevent fraud in the subsequent trading of securities; prohibits insider trading and other frauds in the purchase and sale of securities in the after markets; requires continuous reporting to investors and the Securities Exchange Commission (SEC)
Securities and Exchange Commission (SEC)
federal administrative agency that is empowered to administer federal securities laws; authority to adopt rules and regulations to interpret and implement federal securities laws
Registration
document that an issuer of securities files with the SEC that contains required information about the issuer, the securities to be issue, and other relevant information
Prospectus
written disclosure document that must be submitted to the SEC along with the registration statement and given to prospective purchasers of the securities; provided to prospective investors to enable them to evaluate the financial risk of an investment
Prefiling Period
black-out period; a period of time that begins when the issuer first contemplates issuing securities and ends when the registration statement is filed—the issuer may not condition the market during this period; No insider can speak with outsider during this time
Securities Exchange Act of 1934
federal statute that primarily regulates the trading in securities
Section 10(b) of SEA of 1934
prohibits the use of manipulative and deceptive devises in contravention of the rules and regulations prescribed by the SEC
Rule 10b-5
adopted by the SEC to clarify the reach of Section 10(b) against deceptive and fraudulent activities in the purchase and sale of securities
Scienter
required for there to be a violation of Section 10(b) and Rule 10b-5; intentional conduct
Insider Trading Sanctions Act
federal statute that permits the SEC to obtain a civil penalty of up to three times the illegal benefits received from insider trading
Insider Trading
occurs when a company employee or company advisor uses nonpublic information to make a profit by trading in the securities of the company. The duty of an insider who possesses material nonpublic information is to either 1. Don't tell anyone and 2. Don't trade on info—Example: Sell bonds or stock
Insiders
defined as officers, directors, and employees at all levels of a company; lawyers, accountants, consultants, and agents and representatives who are hired by the company on a temporary and non-employee basis to provide services or work to the company; and other who owe a fiduciary duty to the company
Tipper
a person who disclosed material nonpublic information to another person
Tippee
a person who receives material nonpublic information from a tipper
Section 16(b) of SEA of 1934
requires that any profits made by a statutory insider on transactions involving short-swing profits belong to the corporation; any person who is an executive officer, director, or 10% shareholder of a reporting company as a statutory insider
Short-Swing Profits
trades involving equity securities occurring within six months of each other
State Securities Laws
"blue-sky" laws; help prevent investors from purchasing a piece of the blue sky
Certified Public Accountant (CPA)
an accountant who has met certain educational requirements, has passed the CPA examination, and has had a certain number of years of auditing experience
Generally Accepted Accounting Principles (GAAPs)
standards for the preparation and presentation of financial statements—company/corporation
Generally Accepted Auditing Standards (GAASs)
standards for the methods and procedures that must be used to conduct audits—CPA uses to audit company
Audit
a certification of a company's books and records pursuant to federal securities laws, states laws, and stock exchange rules that must be performed by an independent CPA
Auditor's Opinion
an opinion of an auditor about how fairly the financial statements of the client company represent the company's financial position, results of operations, and change in cash flows
Engagement
formal entrance into a contract between a client and an accountant.
Breach of Contract
fails to perform and may be sued for damages
Actual Fraud
the intentional misrepresentation or omission of a material fact that is relied on by the client and causes the client damage
Constructive Fraud
occurs when an accountant acts with "reckless disregard" for the truth or the consequences of his or her actions
Negligence
accountant breaches the duty of reasonable care, knowledge, skill, and judgment that he or she owes to a client when providing auditing and other accounting services to the client
Ultramares Doctrine
a rule that says an accountant is liable only for negligence to third parties who are in privity of contract or in a privity-like relationship with the accountant; provides a narrow standard for holding accountants liable to thirds parties for negligence
Privity of Contract
the state of two specified parties being in a contract
Section 11(a) of SEA of 1933
imposes civil liability on accountants and others for making misstatements or omissions of material facts in a registration statement or failing to find such misstatements or omissions
Accountant-Client Privilege
state statue that provides that an accountant cannot be called as a witness against a client in a court action; accountant cannot be called as a witness against a client in a court action—but no accountant-client privilege under federal law and the U.S. Supreme Court
Principal Duties
compensation, reimburse, train/supervise, indemnify, cooperate
Agent Duties
perform duties in contract/meet standard of reason, notify, maintain accurate accounting of all transactions, loyalty
Mutual Agreement
parties mutually agree to terminate their agreement
Lapse of Time
agency terminates when specified time period elapses
Purpose Achieved
principal employ agent for the time it takes to accomplish a certain task/purpose, the agency terminates when they are completed
Occurrence of a Special Event
agency exists until a specified event occurs, then terminates when event happens
Frolic and Detour
a situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principals
Coming and Going Rule
a principal is generally not liable for injuries cause by its agents and employees while they are on their way to or from work
Fully Disclosed Agency
an agency in which a contracting third party knows that the agent is acting for the principle and the identity of the principal; contract between the principal and third party
Undisclosed Agency
an agency in which a contracting third party does not know of either the existence of the agency or the principal's identity; principal and agent are liable on the contract with the third party
Strikes
a cessation of work by union members in order to obtain economic benefits or correct an unfair labor practices; employee-initiated
Lockout
an act of an employer to prevent employees from entering the work premises when the employer reasonable anticipates a strike; employer/owner won't let employees work
Worker Adjustment and Retraining Notification Act (WARN)
a federal act that requires employers with 100 or more employees to give their employees 60 days' notice before engaging certain plant closings or layoffs
Entrepreneur
anyone who assumes responsibilities for the success or failure of a company
Identification
the company will pay legal fees if sued. Example: If I own part of the business, I am responsible.
Winding Up
the process of liquidating a partnership's assets and distributing the proceeds to satisfy claims against the partnership
Domestic Company
does business in the same state of its headquarters
Foreign Company
when the headquarters is in one state and operations are in another
Alien
when the headquarters is in a foreign country and work is in the United States. Example: Headquarters is in France, but Joe does business in PA
Bylaws
tell you the number of shares, how many officers, etc.
Private Company
does not tell anyone their finances
Public Company
decided to sell stock publicly
Authorized Shared
the number of shares provided for in the articles of incorporation; bylaws allow
Issued Shares
shares that have been sold by a corporation
Ultra Vires
when a board of directors does something against the bylaws
Franchise
is the permission to use some else's business plan
Franchise Fee
money to pay for the franchise
Franchise Agreement
a settlement for the franchise
FTC Clause
tells the franchise you owe money the moment you sign for it
License
permission to use someone else's property
Joint Venture
two competitors who can talk without doing wrong
Intrastate Offering
permits local businesses to raise capital from local investors to be used in the local economy without the need to register with the SEC
Private Placement
permits issuers to raise capital from an unlimited number of accredited investors and no more than 35 non-accredited investors without having to register the offering with the SEC
Small Offering
permits the sale of securities not exceeding $1 million during a 12-month period
Unemployment Compensation
1. At Will: can be fired at any time unless CBA, Individual employment contract, and Law (usually a discrimination—no UEC); 2. For Cause: employees fault - did something wrong; cannot collect
Medicare
health policy that begins when one retires, usually ages 62-65; percentage of money is taken out of every pay check for Medicare
Insurance
contract whereby one party undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event - means of transferring and distributing risk of loss
Insured
person or property being covered; party who pays a premium to a particular insurance company for insurance coverage among all the parties
Insurer
insurance company; person providing coverage
Policy
insurance contact
Premium
money paid to the insurance company
Insurable Interest
requirement that a person who purchases insurance have a personal interest in the insured item or person
Beneficiary
person who receives proceeds when the insured dies
Owner
pays premium and names beneficiary
Intestate
person who dies without a will
Testator
person who wrote a will and can give you things to whomever
Heirs
people whom the state says gets your belongings if you have no will
Executor
someone who carries out a will
Copyright
original; writings, art, software, movies, music; Fair Use Doctrine; Copyright expires goes to public domain; Copyright infringement; Copyright protection is granted for an individual's life plus 70 years; Copyrights owned by business are protected for 95 years from the year of first publication or 120 years from the year of creation
Trademark
marks and logos; Must be distinctive and have a secondary meaning; Regional - only good where you are selling the product; Trademark infringement; Original registration of a mark is valid for 10 years and can be renewed an unlimited number of 10 year periods
Lanham Act
an amended federal statute that established the requirements for obtaining a federal mark and protects marks from infringement
Patent
inventions; must be new and useful; Legal monopoly; Patent infringement; Patents for interventions are valid for 20 years; Design patents are valid for 14years; After patent period runs out the invention enters the public domain - anyone can produce and sell the invention without paying the prior patent holder
Required for Patent
Novel - new and never been invented; Useful - practical purpose; Non-obvious
Trade Secrets
product formula, pattern, design, compilation of data, customer list, or other business secrets; required to keep it a secret; (example: coca-cola recipe);Misappropriation is anyone who steals a trade secret; Usually pay in stock to keep quiet or sign confidentiality agreement to keep individuals from telling the secret
Advertisement
invitation to an offer; Advertisement | offer + acceptance + validation = contract
Merger Rule
says that a court would not even consider any oral terms that might be discussed
Covenant
unconditional promise to perform an act in the contract; nonperformance of a covenant is a breach of contract that gives the other party to sue
Condition
something that has to occur before a covenant can happen; qualification that becomes a covenant if it is met
Rights and Duties
contract creates this for each party
Breach
if one of the parties were to fail to fulfill their rights and duties of the contract
Aggrieved
party who did not breach the contract
Remedy
its purpose is to make the aggrieved party whole again
Specific Performance
court applied to make breaching party perform specific duties of the contract
4 Grounds for Rescission
1. mutual mistake; 2. undue influence; 3. Duress; 4. Fraud
Article 2 of UCC
states that sales contracts for the sale of goods costing $500 or more must be in writing to be enforceable
Article 2A of UCC
states that lease contracts involving payments of $1000 or more must be in writing
Right to Cure
the seller's right to make a contract good within a reasonable amount of time
Right to Cover
the buyer's right to seek substitute goods from another seller after a reasonable amount of time
Good Faith Purchaser for Value
person to whom good title can be transferred from a person with voidable title; the real owner cannot reclaim goods for a good faith purchaser value
Power
legal term for giving someone a choice
Revoke
when offeror takes back offer
Warranty
implied assurance to a buyer or lessee that the goods sold are leased meet certain quality standards
Puffing
commendation of goods, made by a seller or lessor, that does not create an express
Embezzlement
the fraudulent conversion of property by a person to whom that property was entrusted
4th Amendment
protection of unreasonable search and seizures by U.S. Constitution
Felony
sentence > 6 months in jail; right to jury of your peers
Injured Party
person who gets hurt (plaintiff)
Tortfeasor
person who commits a tort; person who does the hurting (defendant)
Libel
false statement that appears in writing or other fixed medium
Waiver
assumption of risk
Section 7 of the Clayton Act
merge two companies to one; might have to sell off one of buildings and must notify the Department of Justice
Section 1 of Sherman Act
prohibits the restraint of trade
Section 2 of Sherman Act
prohibits the act of monopolization - must be an act of monopolization and must have monopoly power
Criminal
prosecutor vs. defendant
Civil
plaintiff vs. defendant
Misdemeanor
sentence < 6 months in jail; right to jury of your peers
Arraignment
police finds district justice (magistrate)/needs to prove to district justice you committed a crime; bail is set
Indictment
where the DA decides if you will be charged with a crime or not
Trial
done by the judge and jury
Verdict
when jury decides whether you are innocent or guilty
Sentencing
if jury finds you guilty the judge decides how long you will be in jail
5th Amendment
U.S. Constitution has recognized the following privileges under which an accused may keep the following individuals from being witnesses against him
Elements of Negligence
1. Duty of Care; 2. Breach of the duty of care; 3. Injury 4. Actual cause